By the early 1900s, increased competition and pressing demands to fulfill orders made factory owners take serious note of productivity, and issues such as employee absenteeism and high turnover came into focus. The dominant philosophy during this time was that employees would accept rigid standards and work faster if provided training and more wages. This approach led to Frederick W. Taylor’s scientific management theory that involved time studies in an attempt to establish the most productive way to undertake a process.
The personnel department during this time was an instrument in the hands of the employer to ensure maximum productivity. Side-by-side with providing training and wages, it broke strikes by blacklisting union members and forcing workers to sign "yellow-dog" contracts or an agreement not to join unions.
Personnel management gained a more professional role in the aftermath of World War I and the Great Depression of the early 1930s. The demands of wartime production had led to enactment of several provisions to ensure that issues related to wages or working conditions did not hinder production. Among the social security measures initiated in the aftermath of the Great Depression were the Norris-LaGuardia Act that made "yellow-dog" contracts unenforceable and the National Labor Relations Act (NLRA) or Wagner Act (1935) that gave employees the right to form unions and bargain collectively, and listed unfair labor practices.
Elton Mayo, the father of human relations, had conducted his famous Hawthorne Studies (1924 -1932) and concluded that human factors or non-monetary rewards were more important than physical factors or monetary rewards in motivating employees. Trade unions now began to challenge the fairness of Taylor’s scientific management theories, forcing employers to take a more behavioral-oriented approach. Personnel programs now expanded to include new benefits such as sick benefits, vaccinations, holidays, housing allowances, and similar measures, and to implement the new behavioral-oriented theories.
World War II increased the importance of keeping factories running, and with most workers away in war, the workforce now began to include the hitherto-absent women and native Americans. This laid the foundation for a multicultural workforce, and along with it, new challenges for the human resource department.
The 1947 Labor-Management Relations Act or the Taft-Hartley Act banned the use of "closed shops" or hiring only workers from a union, and gave government the role of mediating union and management disagreements.
